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The BS List – We Don’t Like This Space (No. 52) — This is going to be BIG

Republished By Plato
Republished By Plato

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One of my favorite startups to have backed was a travel company called Noken. You answered a few basic questions about travel preferences, like pace, the fanciness of the hotel, etc., and then BOOM they sent you a link to an app with your whole trip, completely booked, with a map driven itinerary and a text concierge available to make last minute changes, etc. We went on two Noken trips, including our honeymoon and we used the concierge to reschedule a puffin boat tour in Iceland. Total cost was just $5 per traveler per day and Noken took a cut of the bookings. Unfortunately, they didn’t make it through the travel pause of the pandemic, but as a consumer, it was the best travel experience I ever had.

Raising money for it, as you might imagine given the space, could have been very tough. A lot of VCs told me they didn’t want to do it because, “We don’t like travel” which I imagine was also a lot of people’s responses to Airbnb.

This is also a ridiculously lazy way to decide not to parse any ideas in a multiple trillion-dollar industry.

Plus, as you might imagine given its inclusion on this list, it’s BS. If Jack Dorsey decided that travel was the next thing he wanted to solve after founding multi-billion dollar companies like Twitter and Square (X and Block?) you know there would be VCs lining up to fund it.

Same goes for Paul English, founding CTO of Kayak. I’m sure he could get a seed round for a travel startup without any issue.

So, really, it’s not that they don’t want to do travel. It’s more like they don’t want to do your travel idea or perhaps not back you in a travel deal.

So how did I get other VCs to take a look?

I sent a very specific note that outlined the issues that I thought VCs have with many business models in this industry with the subject line “Travel startups suck” and then positioned the company has not falling prey to any of those reasons why someone wouldn’t want to invest in travel.

When someone passes with a broad brush, it’s really up to the founds to do two things:

  1. Do enough research to understand why VCs say whatever they say about this industry. Know what the concerns are going to be ahead of time and weave them into your pitch: “Everyone who builds X runs into problem Y. We’re avoiding that pitfall by doing Z, which is why we believe we’re going to finally unlock the billions in this industry that has vexed dozens of startups before us.”

  2. Ask specifically what terrible things about startups in this space the VC is trying to avoid. Are the consumers not deep-pocketed enough? (and do you have the revenue traction to prove otherwise?) Is it too hard to unseat entrenched incumbents? (And do you have customer wins to show that you’re doing that.) Either VCs can identify a very specific, unassailable issue of specific risk they don’t believe the return is there for, or they’re just being lazy.

You should never let a VC off easy by letting them lazily paint a whole industry as a terrible place to invest. For everyone who’s ever said that travel sucks, music sucks, or e-commerce sucks there’s an Airbnb, Spotify, or Shein that has bucked the trend—and isn’t that what VCs are looking for? Outliers?

You just have to be knowledgeable enough about the space to be able to prove to them why your company will be that outlier—and frankly, most founders don’t know enough about their industry to understand how to explain all that.

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